Validating your Offer with Advertising

(Photo Credit)

In a recent post, I shared my personal framework for How I Write Compelling Online Ads. Now that you’ve got a comprehensive set of potential ads, it’s time to set up your advertising campaign to validate your offer.

I approach the validation process and testing using advertisements in three phases, as follows:

  • Run a broad campaign in Google AdWords (Phase 1);
  • Take those results and run a scoped campaign in Facebook Ads (Phase 2); and
  • Analyze the entire set of results and decide on next course of action (Phase 3).

This article represents the first half of Part 11 in our real-time experiment, Testing the Muse in Practice. This post specifically focuses on Phase 1 of our above framework – setting up an advertising campaign on Google AdWords.

 

Advertising with Google AdWords

Prior to releasing this post, I felt it was important to produce a primer on Google AdWords.  If you haven’t already read our tutorial on the subject, read the last post on Mastering Google AdWords here.

In addition, we’ve used and recommend a number of courses that specifically help you learn to excel using Google AdWord’s PPC advertising platform – ranging from:

Dovetailing nicely with our AdWords tutorial, I’m going to assume you’ve already read those basics and have an AdWords account (easy to get and free) and have access to begin entering your ads to validate your offer. This is how I do it…

The first decision is how much are you planning on spending on testing your muse? What’s that validation worth to you?

I tend to start with a total budget of $200-$300. It’s a small investment that won’t break the bank, and leaves me with some wiggle-room if I estimate that the whole Testing the Muse process will run me approximately $500.

There’s no doubt in my mind that you are saving yourself tons of money (and time) by muse testing first, rather than moving full-steam ahead into an untested endeavor. So these costs are worth it, regardless of your set amount.

 

Advertising Campaign Mechanics

Starting with a $250 advertising budget on Google AdWords, I limit my campaign to run 5-days, with a maximum expenditure of $50 per day, let’s say Monday to Friday.

You could run your ad campaign forever-and-a-day, and Google would be quite happy to take your money. But we’re on a testing budget, so you’ll need to set some firm parameters around this ad campaign.

In defining your budget, you also need to set a default [maximum] bid for your “cost per click” (CPC). The CPC is influenced by the popularity/competition of your specific keywords.

For example, if you are trying to advertise using the keyword “real estate”, your competition (and thus your CPC) is going to be huge. That’s why online marketers are always stressing the need to niche down your offer, and to use long tail keywords, which typically have less competition than one word or two word phrases.

Recall my analysis in Part 2 of this series – the keyword “used cars” was extremely competitive; “compare used cars” was not so much. I could spend more and target anyone searching “used cars”, but this is going to attract a lot of untargeted traffic, and cost me tons as a result.

I typically resort to allowing Google to automatically choose the default bid, provided this amount would allow a minimum 100 visitors (clicks) through to my website within the timeframe (and within the budget) of my campaign.

For illustrative purposes, assume we’re targeting the keyword “used cars” and the CPC for this keyword is $2.50 maximum per click (it’s actually $2.62 at the time of this writing). If my budget allows for an expenditure of $50/day, with a campaign timeframe of 5 days, I will allow Google to simply use the maximum “suggested bid” of $2.50. Doing so will almost guarantee I reach my minimum 100 visitors ($50 x 5 days / $2.50 CPC = 100 clicks). It also increases the likelihood of those ads being well positioned, relative to its competitors.

If you modify and decrease the “suggested bid”, you may pay less upfront, but your ads may not be as competitive, you may not get the traffic necessary to make an informed decision, and ultimately you may have to extend your campaign (thus spending additional money).

Also, the suggested bid is really the “max” bid, and it often comes in much lower per click, which means you will likely get more than just the [arbitrary] minimum of 100 visitors.

Why do I want to have at least 100? Really, there’s no reason; it just feels like a good cross-section/baseline. More visitors is ideal (obviously), but 20 visitors or 50 visitors just does not seem adequate, especially over a 5-day period.

You may be asking, isn’t letting Google choose your default CPC like letting the fox into the hen house? Sure, it would seem that way, but no. They know your keywords and they’ve got the algorithm that can tell you what CPC will be competitive enough to get you in front of the most people – namely as the first or second ad that people see during their searches. Yes, they want to maximize profit, but understand that Google has a vested interest in you executing a successful campaign – which will result in more traffic for you, and more [future] advertising dollars for them.

But the numbers have to work for your budget. If Google’s suggested CPC is too high, and wouldn’t allow your site to achieve a minimum 100 visitors within the timeframe of your campaign, you have a couple choices:

  • Niche down – go deeper with your keyword research, to find words that are less competitive (read: less expensive!). But you already did this during your research phase, right?; or
  • Expand your ad campaign – you can do this by increasing your budget, or increasing the timeline (number of days the ads are run).

Another cool setting that you get to customize in AdWords is the geography that gets targeted by your ads. This could really help stretch your dollar if your product offering relates to a specific locale – whether it be certain cities or limited to specific countries.

For all of my testing, I simply focus on North America (U.S. and Canada), even if it’s a digital good. It doesn’t limit people in other countries from accessing your website, it merely defines where your ads get displayed, which helps mitigate advertising costs while testing. As a very broad statement, the North American population generally represents a large sample of English speaking people, who have ready access to the internet, with relative discretionary income to potentially buy online.

 

Identifying your Top Performing Ads

Once your Google AdWords campaign has run its course (e.g. for 5 days), it’s time to tally up the results. I rarely monitor it during the 5 days, expect to check-in at the beginning to ensure everything’s been accepted and the status is active, and then again at the end to make sure the ads have stopped running.

At the end of the campaign, you want to assess the effectiveness of your ads and select your top performing ads. Often there will be 1-3 ads that clearly attracted the most clicks. Aim to isolate the top 2-5 (max.) to move onto Phase 2.

How do you know which ads performed the best? AdWords will provide detailed information on each ad, such as:

  • Clicks – the number of times someone clicked on that ad;
  • Impressions – the number of times that ad was served up on someone’s screen;
  • Click Through Rate (CTR) – a percentage expression of clicks-to-impressions;
  • Average Cost Per Click (CPC) – the amount of money it cost you every time someone clicked on that ad;
  • Cost – the dollar amount of clicks by CPC; and
  • Average Position – the position of where your ad appeared relative to the other ads being shown at the same time.

Although I look at all of the above factors, the quickest indicator of how well an ad performed is by reviewing the CTR – the higher the better. A high percentage simply means that the ad received a healthy number of clicks relative to the number of times it was served up to people surfing the web (e.g. it was effective).

Could you stop there – and rely on this feedback as a measure whether your idea has solid potential or not?  Absolutely.

If you received enough traffic to your site, and your ads performed extremely well, and you even got a number of people submitting their email – that should give you enough confidence to begin taking your product/idea to the next level of development.

But only you can make this determination. We’ll certainly talk about a few indicators to help guide your decision-making when we analyze the results for this particular experiment, but the reality is that there is no one magic number or answer that’s going to give you the “green light” on a project.

Personally, I use a second filter of checks-and-balances to test the results from Phase 1. I’ve added a second Phase of advertising that takes your best of Phase 1, and runs it through a public test one more time using a different, but equally effective, advertising platform – Facebook Ads.

Stay tuned for the second half of Part 11 in this series where we detail exactly how we plan and execute a final advertising campaign using Facebook Ads.

 

Key Resources Mentioned:

Best Always,

Jonah


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